Secretary Tim Geithner Discusses the 'Healthy, but Slow' Economic Recovery

GEITHNER: It was a tragic mistake for this country that we came into this crisis without the ability and the authority – not just to prevent that kind of risk from developing–but without the authority to manage that failure affectively. And the basic reality was we came into September of 2008 without that authority. That's why the previous administration had to go to the Congress, in a very short period of time, and get authority that put capital into financial institutions, better tools. And even today, we still don't have the capacity to deal with a future AIG, a future Lehman. That's why we're proposing these better tools for crisis management. So it was a tragic thing for the country, the government did not have the ability at that point. But they did not make a choice. It was really – they had no ability at that point, given what Lehman, the sort of the size of capital needs of Lehman, to come in at that point and prevent failure.

MORAN: If you had had the authority it would have been better to keep Lehman afloat?

GEITHNER: I believe it would have been better, but we would still have faced enormously power financial crisis at that point. And it probably would not have saved us, still, from a very deep recession and a risk of substantial further failure across the financial system. Because at that point this global storm already had enormous force; Lehman was a sort symptom of the power of that storm. And it's failure did make things worse. But it would have been a terribly traumatic period for the U.S. economy, global economy, anyway, and we would have still had to do extraordinary things to stabilize the system.

MORAN: Were there times during those weeks and months that you thought this whole thing could go down?

GEITHNER: Absolutely.

MORAN: The whole financial system could collapse?

GEITHNER: Absolutely. I think we did. We were really at the edge of the abyss. And for the first time in really almost a century, we faced the prospect of a catastrophic failure of our financial system. And that's why it was so important. What Congress ultimately did, which was to provide exceptional authority for the government, was absolutely important to help stabilize the system. And it's our -- you know it's take extraordinary actions just to bring the system to the point where we are today where you're seeing a little bit more stability, a little bit more confidence and the beginning of the process of repair.

MORAN: Are we out of the woods?

GEITHNER: We are in a better position than we were three, six, nine months ago.

MORAN: Is that a yes?

GEITHNER: I think we are in a better -- much better position to get through this. But not -- only because your president, working with the Congress and countries around the world, was willing and able to put a substantial force at work to help get people back to work, help bring confidence back, help provide some stability to the financial system.

MORAN: As somebody who's spent a lifetime in these matters, in those weeks and months when were at the edge of the abyss, as you say, were you scared?

GEITHNER: I was very worried about the basic fabric of the stability of our system. Absolutely. I think, again, it was something I don't think anybody had ever seen in their lifetime. And as you saw from the events that followed, it was clear it was going to cause enormous damage to the basic lives of millions of Americans and people around the world.

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